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The ranking Democratic member of the Committee on Education and the Work Force wants the Labor Department to address potential conflicts of interests with consultants who advise public pension plans.

U.S. Rep. George Miller, D-California, suggested in a letter to Labor Secretary Thomas Perez that the trend of consultants that also actively manage money for the funds they advise “appears to create significant and inappropriate conflicts.”

“As revenues and margins in the pension consulting business have come under pressure, it appears that more and more of these firms have sought to transition these relationships from a pure consulting model to one where the consultants step into the role of becoming a manager of plan assets,” wrote Miller. “In effect, the consultant firm may recommend itself as a manager and thereby receive additional or higher fees.”

More than 75 percent of consulting firms to the $6.5 trillion pension fund industry act as both investment managers and outside consultants for their clients, according to the SEC.

Some pubic pension funds ban consultants from also acting as money managers, but most don’t.

The letter to Perez, first reported by the Wall Street Journal, is the latest salvo in an ongoing battle to increase disclosure of how consultants to funds are compensated and to root out conflicts of interest.

In 2005, the SEC found that some consultants were paid directly by the money managers they were recommending to plan trustees. In 2007, the Government Accountability Office found that the annual returns of plans that employed consultants with compensation arrangements with money managers were 1.3 percent lower than plans without such arrangements.

Some management firms that also act as consultants will not recommend their own firm when it comes to adding additional services. Others claim to disclose all potential conflicts of interest.

As noted by the Journal, one of the nation’s largest pension funds, CalPERS, banned its consultants from managing private equity, real estate or other non-public assets in 2011. Another huge California union, CalSTRS, hasn’t implemented a formal ban. Often plans will disallow managers from acting as consultants without formally prohibiting the relationships.